Macau's Casino Junket Segment Continues to Shrink
LISTEN TO THIS ARTICLE:Licensed junkets in Macau continue to drop off the market, falling from 36 to just 18 over the past 12 months, according to the Gaming Inspection and Coordination Bureau (DICJ, for its Portuguese acronym). This decline is a direct result of recent changes to Macau's junket law, which has tightened regulations and restricted the activities of junkets.
Tightened Controls over Junkets
The new junket law prohibits junkets from engaging in revenue-sharing arrangements with casino concessionaires, which was a key source of income for many junket operators. Instead, junkets can only receive a commission of up to 1.25% of the rolling chip turnover. Additionally, junkets can no longer operate VIP rooms within Macau's casinos.
Related: Industry Experts Analyze Macau's Junket Regulatory OverhaulThese changes have made it more difficult for junkets to operate profitably, leading many of them to close down. The DICJ has also imposed stricter requirements for junkets to obtain a license, including requiring them to provide a guarantee of MOP$1.5 million (US$186,300). They must also have registered capital of at least MOP$10 million (US$1.24 million).
The decline of the junket industry has had a significant impact on Macau's gaming industry. Junkets are responsible for bringing high-roller gamblers to Macau, who typically spend more than mass-market gamblers. The reduction in the number of junkets has led to a decline in VIP gaming revenue, which has been a major driver of Macau's gaming industry for many years.
However, there are some signs that the junket industry may be stabilizing. The DICJ has reportedly begun considering license applications from new junkets, and the local economy has seen substantial improvements since Macau reopened its borders early last year.
Mass Market Gaming Takes over from VIPs
In 2024, mass market gambling is likely to return to the pre-COVID-19 pandemic level, or even outpace it. However, the return of VIP gamblers is more uncertain due to a number of factors, including a slower global economy and continuing travel restrictions.
Furthermore, under scrutiny by the legislative body, is the proposed legislation concerning sports lending, a law that will effectively exclude junkets from acting as money lenders. Consequently, this measure will inevitably result in a decline in job opportunities for junket operators, potentially garnering increased backing for this cause. Nonetheless, notwithstanding the obstacles faced, there remains a viable scope for junkets to endure and flourish within the realm of Macau.
The prospects for the flourishing market seem promising, with projections of steady growth in the near future. Moreover, the government has initiated measures to bolster the junket industry’s progress. Nevertheless, it is improbable that the city will witness a resurgence to over 380 junkets, mirroring its peak during the era of its gambling success a few years ago.
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